The U.S. Small Business Administration will be unveiling an online portal where Paycheck Protection Program borrowers can directly apply for forgiveness on loans of $150,000 or less without going through their bank.
This change aims to speed relief to more than 6.5 million small businesses that took out PPP loans to get them through the pandemic. The portal will begin accepting applications from borrowers on Aug. 4. However, lenders need to opt into the program to allow the SBA to provide direct forgiveness to borrowers.
The PPP, which was included as part of the CARES Act, aimed to speed relief to struggling small businesses dealing with the pandemic since last year, though in many cases fraudsters took advantage of the program and applied for funds even though they didn’t operate businesses or retain their employees as originally required, In 2021 SBA approved over 6.5 million SBA loans totaling over $275 billion. The average loan size in 2021 was approximately $42,000, compared to $101,000 in 2020. The vast majority (96%) of loans in 2021 went to businesses with fewer than 20 employees, compared to 87% in 2020. Accountants have been helping small business clients apply for the PPP loans and then for forgiveness of the loans. The loan forgiveness process has been cumbersome, however. Last month, the SBA reportedly moved to eliminate the lengthy loan necessity questionnaire to speed the process of applying for the loans. Now it aims to wrap up the program and speed the loan forgiveness process. Applications for the latest iteration of the PPP actually ended May 31 after the program was extended by the American Rescue Plan Act in March.
“The SBA’s new streamlined application portal will simplify forgiveness for millions of our smallest businesses — including many sole proprietors — who used funds from our Paycheck Protection Program loans to survive the pandemic,” said SBA administrator Isabel Casillas Guzman in a statement Thursday. “The vast majority of businesses waiting for forgiveness have loans under $150,000. These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process. We need to deliver forgiveness more efficiently so they can get back to enlivening our Main Streets, sustaining our neighborhoods and fueling our nation’s economy.”
More than 600 banks have opted in to direct forgiveness, allowing over 2.17 million borrowers to apply through the portal. That figure represents 30% of loans $150,000 or less that haven’t yet been submitted for forgiveness.
Lenders can opt into the program through
“This initiative will allow PPP borrowers to put their concerns of achieving full forgiveness behind them and focus on operating and growing their businesses again,” said Patrick Kelley, associate administrator of the SBA’s Office of Capital Access, in a statement. “We are pleased to be able to assist financial institutions across the U.S. in processing forgiveness applications for small business owners.”
